MW Why Nvidia's stock is falling despite a historic earnings beat
By Britney Nguyen
Blockbuster earnings were anticipated as Nvidia's big customers have already indicated how much they've hiked their spending on hardware
Nvidia's stock fell after it reported a fiscal fourth-quarter earnings beat.
When Nvidia earns $43 billion in a quarter, does it make a sound?
Perhaps a whimper. Nvidia's stock (NVDA) is down more than 4% after Thursday's open, despite what Morgan Stanley's Joseph Moore said was a historic beat-and-raise performance for a chip company. Nvidia's revenue exceeded estimates by about $3 billion, and its guidance came in roughly $5 billion above what analysts had been modeling.
That sort of beat might have been anticipated, as Nvidia's hyperscaler customers recently lifted their capital-expense forecasts, signaling a continued flood of spending on chips.
Moore said that while the muted stock reaction is surprising, the debates hanging over Nvidia's stock "are longer term in nature."
Despite the boosts to capital-expenditures forecasts, investors have been worried about the sustainability of artificial-intelligence spending, and Moore said hyperscalers' free-cash generation looks to be "under significant pressure" from all the investments so far.
He's not so worried. Hyperscalers are asking for more compute power, he said. While the costs are a challenge, the demand is coming from a shift to inference, or running AI models, which eventually translates to revenue.
The long term "looks pretty good," Moore said in his Thursday note.
See more: Nvidia's earnings report is just a prelude to what should really matter for investors
The bigger catalysts for Nvidia's stock may be Nvidia CEO Jensen Huang's upcoming keynote at Morgan Stanley's technology conference and the chip maker's annual GTC in March, according to Moore. Investors will be looking for more details on the company's product road map, including updates on its Vera Rubin chip platform and following Feynman architecture.
Bernstein analyst Stacy Rasgon said he isn't "sure what else investors want to hear at this point," but buy-side expectations for Nvidia looking into 2027 seem "very plausible" as demand for its products shows "zero signs of slowing." Specifically, he pointed to a buy-side view that $12 or more of earnings per share may be possible for Nvidia next calendar year. The FactSet consensus was for more like $10.
Meanwhile, Nvidia has also been swept up by concerns over rising memory prices due to supply shortages. Nvidia's chips need a lot of memory, though the heavy demand for memory has helped drive industry prices higher against a tight supply backdrop.
Nvidia's "confident-but-conservative messaging on" its 75% gross margin should be good news to investors, TD Cowen analyst Joshua Buchalter said in a Wednesday note. The company likely locked in its memory supply and pricing ahead of the supply crunch, he added.
Buchalter is a bit confounded by the sluggishness of Nvidia's stock recently, as software stocks have slumped.
"To highlight just one oddity - it's odd to us that software stocks seem to be pricing existential declines while the hardware infrastructure that would enable such a future outcome is pricing a rapid decline in demand," he wrote.
Don't miss: Why Nvidia is 'highly motivated' to keep investing in OpenAI
-Britney Nguyen
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February 26, 2026 10:36 ET (15:36 GMT)
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